General framework

Author:Secretariat General
Profession:Council of the European Union

Introduction- Developing the Economic Pillar- Renewed Commitment- Resolution of the European Council of 13 December 1997 on economic policy coordination in Stage III of EMU and on Treaty Articles 109 and 109b of the EC Treaty - I. Coordination of economic policies in Stage III of economic and monetary union (EMU)- II. Implementing the Treaty provisions on the exchange rate policy, external position and representation of the Community (Article 109 of the Treaty)- III. Dialogue between the Council and the ECB- Presidency conclusions Lisbon European Council 23 and 24 March 2000 (extract)- I. Employment, Economic Reform and Social Cohesion- A Strategic Goal for the Next Decade- The new challenge- The Union's strengths and weaknesses- The way forward- Preparing the Transition to a Competitive, Dynamic and Knowledge-Based Economy- An information society for all- Establishing a European area of research and innovation- Creating a friendly environment for starting up and developing innovative businesses, especially SMEs- Economic reforms for a complete and fully operational internal market- Efficient and integrated financial markets- Coordinating macroeconomicpolicies: fiscal consolidation, quality and sustainability of public finances- Modernising The European Social Model by Investing in People and Building an Active Welfare State- Education and training for living and working in the knowledge society- More and better jobs for Europe: developing an active employment policy- Modernising social protection- Promoting social inclusion- Putting Decisions Into Practice: A More Coherent and Systematic Approach Improving the existing processes- Implementing a new open method of coordination- European Council Brussels 22 and 23 March 2005 Presidency conclusions (extract)- II. Relaunching the Lisbon Strategy: A Partnership for Growth and Employment- A. A Strategy for Today's World- B. Vital Strands of the Relaunch Knowledge and innovation - engines of sustainable growth- An attractive area in which to invest and work- Growth and employment making for social cohesion- C. Improving Governance


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Resolution of the European Council on growth and employment Amsterdam, 16 June 1997

THE 2EUROPEAN COUNCIL,RECALLING the conclusions of the Essen European Council, the Commission's initiative for 'Action on Employment: A Condence Pact' and the Dublin Declaration on Employment,HAS ADOPTED THE FOLLOWING GUIDELINES:

  1. It is imperative to give a new impulse for keeping employment rmly at the top of the political agenda of the European Union. Economic and monetary union and the Stability and Growth Pact will enhance the internal market and will foster a non-inflationary macroeconomic environment with low interest rates, thereby strengthening conditions for economic growth and employment opportunities. In addition, we will need to strengthen the links between a successful and sustainable economic and monetary union, a well functioning internal market and employment. To that end, it should be a priority aim to develop a skilled, trained and adaptable workforce and to make labour markets responsive to economic change. Structural reforms need to be comprehensive in scope, as opposed to limited or occasional measures, so as to address in a coherent manner the complex issue of incentives in creating and taking up a job.

Economic and social policies are mutually reinforcing. Social protection systems should be modernised so as to strengthen their functioning in order to contribute to competitiveness, employment and growth, establishing a durable basis for social cohesion.

This approach, coupled with stability based policies, provides the basis for an economy founded on principles of inclusion, solidarity, justice and a sustainable environment, and capable of beneting all its citizens. Economic eciency and social inclusion are complementary aspects of the more cohesive European society that we all seek.Page 68

Taking account of this statement of principles, the European Council calls upon all the social and economic agents, including the national, regional and local authorities and the social partners, to face fully their responsibilities within their respective sphere of activity.

Developing the Economic Pillar
  1. The Treaty establishing the European Community, in particular Articles 102a and 103, provides for close coordination of the Member States' economic policies referred to in Article 3a of the Treaty. While primary responsibility in the ght against unemployment rests with the Member States, we should re cognise the need both to enhance the eectiveness and to broaden the content of this coordination, focusing in particular on policies for employment. To this end, several steps are necessary.

  2. The broad guidelines of the economic policies will be enhanced and devel oped into an eective instrument for ensuring sustained convergence of the economic performances of the Member States. Within the framework of sound and sustainable macroeconomic policies and on the basis of an evaluation of the economic situation in the European Union and in each Member State, more attention will be given to improving European competitiveness as a prerequis ite for growth and employment, so as, among other objectives, to bring more jobs within the reach of the citizens of Europe. In this context, special attention should be given to labour and product market eciency, technological innova tion and the potential for small and medium-sized enterprises to create jobs.

    Full attention should also be given to training and education systems including life-long learning, work incentives in the tax and benet systems and reducing non-wage labour costs, in order to increase employability.

  3. Taxation and social protection systems should be made more employment friendly thus improving the functioning of labour markets. The European Council stresses the importance for the Member States of creating a tax environment that stimulates enterprise and the creation of jobs. These and other policies for employment will become an essential part of the broad guidelines, taking into account national employment policies and good practices arising from these policies.

  4. The Council is therefore called upon to take the multiannual employment programmes, as envisaged in the Essen procedure, into account when formulating the broad guidelines, in order to strengthen their employment focus. The Council may make the necessary recommendations to the Member States, in accordance with Article 103(4) of the Treaty.

  5. This enhanced coordination of economic policies will complement the procedure as envisaged in the new Title on Employment in the Treaty, which pro-Page 69 vides for the creation of an Employment Committee, which is asked to work together closely with the Economic Policy Committee. The Council should seek to make those provisions immediately eective. In both procedures the European Council will play its integrating and guiding role, in accordance with the Treaty.

  6. The European Union should complement national measures by system atically examining all relevant existing Community policies, including trans- European networks and research and development programmes, to ensure that they are geared towards job creation and economic growth, while respect ing the nancial perspectives and the Interinstitutional Agreement.

  7. The European Council has agreed on concrete action for making maximum progress with the nal completion of the internal market: making the rules more eective, dealing with the key remaining market distortions, avoiding harmful tax competition, removing the sectoral obstacles to market integration and delivering an internal market for the benet of all citizens.

  8. Whereas the task of the European Investment Bank, as stated in Article 198c of the Treaty, is to contribute, by having recourse to the capital market and util ising its own resources, to the balanced and steady development of the com mon market in the interest of the Community, we recognise the important role of the European Investment Bank and the European Investment Fund in cre ating employment through investment opportunities in Europe. We urge the European Investment Bank to step up its activities in this respect, promoting investment projects consistent with sound banking principles and practices, and more particular:

    - to examine the establishment of a facility for the nancing of high-techno logy projects of small and medium-sized enterprises in cooperation with the European Investment Fund, possibly making use of venture capital with involvement of the private banking sector,

    - to examine its scope of intervention in the areas of education, health, urban environment and environmental protection,

    - to step up its interventions in the area of large infrastructure networks by examining the possibility of granting very long-terms loans, primarily for the large priority projects adopted in Essen.

  9. The Commission is invited to make the appropriate proposals in order to ensure that, upon expiration of the Treaty establishing the European Coal and Steel Community in 2002, the revenues of outstanding reserves are used for a research fund for sectors related to the coal and steel industry.

  10. This overall strategy will maximise our eorts to promote employment and social inclusion and to combat unemployment. In doing so, job promotion, worker protection and security will be combined with the need for improvingPage 70 the functioning of labour markets. This also contributes to the good functioning of economic and monetary union.

Renewed Commitment
  1. The European Council invites all parties, namely the Member States, the Council and the Commission, to implement these provisions with vigour and commitment.

    The possibilities oered to social partners by the Social Chapter, which has been integrated into the new Treaty, should serve to underpin the Council's work on employment. The European Council recommends social dialogue and the full use of present Community law concerning the consultation of social partners, including, where relevant, in processes of restructuring, and taking into account national practices.

  2. Together, these policies allow the Member States to build on the strengths of the European construction to coordinate their economic policies eectively within the Council so as to create more jobs and pave the way for a successful and sustainable stage three of economic and monetary union in accordance with the Treaty. The European Council asks social partners to fully face their responsibilities within their respective sphere of activity.Page 71

Resolution of the European Council of 13 December 1997 on economic policy coordination in Stage III of EMU and on Treaty Articles 109 and 109b of the EC Treaty

THE3 EUROPEAN COUNCIL, meeting in Luxembourg on 13 December 1997, Having regard to the Treaty establishing the European Community, Recalling the conclusions of the Amsterdam European Council, notably on improving economic coordination and on eective ways of implementing Articles 109 and 109b of the Treaty, Recalling the Amsterdam European Council Resolution on the Stability and Growth Pact, Recalling the Amsterdam European Council Resolution on Growth and Employment, and Taking note of the report of the Council of 1 December 1997, HAS RESOLVED AS FOLLOWS:Page 72

I Coordination of economic policies in Stage III of economic and monetary union (EMU)
  1. EMU will link the economies of the euro-area Member States more closely together. They will share a single monetary policy and a single exchange rate. Cyclical developments are likely to converge further. Economic policies, and wage determination, however, remain a national responsibility, subject to the provi sions of Article 104c of the Treaty and the Stability and Growth Pact. To the extent that national economic developments have an impact on inflation prospects in the euro area, they will influence monetary conditions in that area. It is for this basic reason that the move to a single currency will require closer Community surveil lance and coordination of economic policies among euro area Member States.

  2. Economic and monetary interdependence with non-participating Member States will also be strong; they all participate in the single market. The need to ensure further convergence and a smooth functioning of the single mar ket therefore requires all Member States to be included in the coordination of economic policies. Moreover, interdependence will be especially strong if non euro-area Member States participate in the new exchange rate mechanism, as countries with a derogation are expected to.

  3. Enhanced economic policy coordination should give full attention to national economic developments and policies which have the potential to influence monetary and nancial conditions throughout the euro area or the smooth functioning of the internal market. This includes:

    - close monitoring of macroeconomic developments in Member States to ensure sustained convergence, and of exchange rate developments of the euro,

    - surveillance of budgetary positions and policies in accordance with the Treaty and the Stability and Growth Pact,

    - monitoring of Member States' structural policies in labour, product and services markets, as well as of cost and price trends, particularly insofar as they aect the chances of achieving sustained non-inflationary growth and job creation, and

    - the fostering of tax reform to raise eciency and the discouragement of harmful tax competition.

    Enhanced economic policy coordination must adhere to the Treaty principle of subsidiarity, respect the prerogatives of national governments in determining their structural and budgetary policies subject to the provisions of the Treaty and the Stability and Growth Pact, respect the independence of the European Page 73 System of Central Banks (ESCB) in pursuing its primary objective of price stability and the role of the Econ Council as the central decision-making body for economic coordination, and respect national traditions and the competences and responsibilities of the social partners in the wage formation process.

  4. To ensure the smooth functioning of EMU, the Council, the Commission and the Member States are called upon to apply the Treaty instruments for economic policy coordination fully and eectively.

    To this end, the broad economic policy guidelines adopted in accordance with Article 103(2) of the Treaty should be developed into an eective instrument for ensuring sustained convergence of Member States. They should provide more concrete and country-specic guidelines and focus more on measures to improve Member States' growth potential, thus increasing employment. Therefore, more attention should henceforth be paid in them to improving competitiveness, labour-, product- and services-market eciency, education and training, and to making taxation and social protection systems more employment-friendly.

    Enhanced coordination should be aimed at securing consistency of national economic policies and their implementation with the broad economic policy guidelines and the proper functioning of EMU. Economic policies and development in each Member State and in the Community should be monitored in the framework of multilateral surveillance according to Article 103(3) of the Treaty. Particular attention should be paid to giving early warning, not only of threatening budgetary situations in accordance with the Stability and Growth Pact, but also of other developments which, if allowed to persist, might threaten stability, competitiveness and future job creation. To this end, the Council is expected to be more ready to make the necessary recommendations in accordance with Article 103(4) of the Treaty to a Member State whenever its economic policies are not consistent with the broad economic policy guidelines. For its part, the Member State concerned should commit itself to take timely and ecient measures which it deems necessary to respond to the Council's recommendations. Moreover, the Member States should commit themselves to a comprehensive and speedy exchange of information on economic developments and policy intentions with a cross-border impact.

  5. Monitoring of the economic situation and policy discussions should become a regular item on the agenda of informal Econ sessions. In order to stimulate an open and frank debate, the Econ Council should from time to time meet in restricted sessions (minister plus one), particularly when conducting multilateral surveillance.Page 74

  6. Under the terms of the Treaty, the Econ Council 4 is the centre for the coordination of the Member States' economic policies and is empowered to act in the relevant areas. In particular, the Econ Council is the only body empowered to formulate and adopt the broad economic policy guidelines which constitute the main instrument of economic coordination.

    The dening position of the Econ Council at the centre of the economic coordination and decision-making process arms the unity and cohesion of the Community.

    The Ministers of the States participating in the euro area may meet informally among themselves to discuss issues connected with their shared specic responsibilities for the single currency. The Commission, and the European Central Bank (ECB) when appropriate, will be invited to take part in the meetings.

    Whenever matters of common interest are concerned they will be discussed by Ministers of all Member States.

    Decisions will in all cases be taken by the Econ Council in accordance with the procedures determined by the Treaty.

II Implementing the Treaty provisions on the exchange rate policy, external position and representation of the Community (Article 109 of the Treaty)

(See Chapter 5 of this publication - 'External representation of the Community')

III Dialogue between the Council and the ECB
  1. In the light of the allocation of responsibilities laid down in the Treaty, the harmonious economic development of the Community in Stage III of EMU will call for continuous and fruitful dialogue between the Council and the ECB, involving the Commission and respecting all aspects of the independence of the ESCB.

  2. The Council should therefore play its full part in exploiting the channels of communication provided by the Treaty. The President of the Council, using his position under Article 109b of the Treaty, should report to the Governing Council of the ECB on the Council's assessment of the economic situation ofPage 75 the Union and on economic policies of the Member States and could discuss with the ECB the views of the Council on exchange rate developments and prospects. The Treaty provides in turn for the ECB President to attend Council meetings whenever the Council is discussing matters relating to the objectives and tasks of the ESCB, for instance when the broad economic policy guidelines are being developed. Importance also attaches to the annual reports which the ECB will make to the European Parliament, the Council and the Commission, as well as to the European Council.

The Economic and Financial Committee, which will bring together senior ocials from the national central banks and the ECB as well as from nance ministries, will provide the framework within which the dialogue can be prepared and continued at the level of senior ocials.Page 76

Presidency conclusions Lisbon European Council 23 and 24 March 2000 (extract)

The European Council held a special meeting on 23 and 24 March 2000 in Lisbon to agree a new strategic goal for the Union in order to strengthen employment, economic reform and social cohesion as part of a knowledge-based economy. At the start of proceedings, an exchange of views was conducted with the President of the European Parliament, Mrs Nicole Fontaine, on the main topics for discussion.

I Employment, Economic Reform and Social Cohesion
A Strategic Goal for the Next Decade
The new challenge
  1. The European Union is confronted with a quantum shift resulting from globalisation and the challenges of a new knowledge-driven economy. These changes are aecting every aspect of people's lives and require a radical trans formation of the European economy. The Union must shape these changes in a manner consistent with its values and concepts of society and also with a view to the forthcoming enlargement.

  2. The rapid and accelerating pace of change means it is urgent for the Union to act now to harness the full benets of the opportunities presented. Hence the need for the Union to set a clear strategic goal and agree a challenging programme for building knowledge infrastructures, enhancing innovation and economic reform, and modernising social welfare and education systems.

The Union's strengths and weaknesses
  1. The Union is experiencing its best macroeconomic outlook for a genera tion. As a result of stability-oriented monetary policy supported by sound scal policies in a context of wage moderation, inflation and interest rates are low, public sector decits have been reduced remarkably and the EU's balance of payments is healthy. The euro has been successfully introduced and is deliver ing the expected benets for the European economy. The internal market is largely complete and is yielding tangible benets for consumers and businesses alike. The forthcoming enlargement will create new opportunities for growth and employment. The Union possesses a generally well-educated workforce as well as social protection systems able to provide, beyond their intrinsic value, the stable framework required for managing the structural changes involved in moving towards a knowledge-based society. Growth and job creation have resumed.Page 77

  2. These strengths should not distract our attention from a number of weaknesses. More than 15 million Europeans are still out of work. The employment rate is too low and is characterised by insucient participation in the labour market by women and older workers. Long-term structural unemployment and marked regional unemployment imbalances remain endemic in parts of the Union. The services sector is underdeveloped, particularly in the areas of telecommunications and the Internet. There is a widening skills gap, especially in information technology where increasing numbers of jobs remain unlled. With the current improved economic situation, the time is right to undertake both economic and social reforms as part of a positive strategy which combines competitiveness and social cohesion.

The way forward
  1. The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. Achieving this goal requires an overall strategy aimed at:

    - preparing the transition to a knowledge-based economy and society by bet ter policies for the information society and R & D, as well as by stepping up the process of structural reform for competitiveness and innovation and by completing the internal market;

    - modernising the European social model, investing in people and combating social exclusion;

    - sustaining the healthy economic outlook and favourable growth prospects by applying an appropriate macroeconomic policy mix.

  2. This strategy is designed to enable the Union to regain the conditions for full employment, and to strengthen regional cohesion in the European Union.

    The European Council needs to set a goal for full employment in Europe in an emerging new society which is more adapted to the personal choices of women and men. If the measures set out below are implemented against a sound mac roeconomic background, an average economic growth rate of around 3 % should be a realistic prospect for the coming years.

  3. Implementing this strategy will be achieved by improving the existing pro cesses, introducing a new open method of coordination at all levels, coupled with a stronger guiding and coordinating role for the European Council to ensure more coherent strategic direction and eective monitoring of progress.

    A meeting of the European Council to be held every spring will dene the rel evant mandates and ensure that they are followed up.Page 78

Preparing the Transition to a Competitive, Dynamic and Knowledge-Based Economy
An information society for all
  1. The shift to a digital, knowledge-based economy, prompted by new goods and services, will be a powerful engine for growth, competitiveness and jobs.

    In addition, it will be capable of improving citizens' quality of life and the envir onment. To make the most of this opportunity, the Council and the Com mission are invited to draw up a comprehensive eEurope Action Plan to be presented to the European Council in June this year, using an open method of coordination based on the benchmarking of national initiatives, combined with the Commission's recent eEurope initiative as well as its communication 'Strategies for jobs in the Information Society'.

  2. Businesses and citizens must have access to an inexpensive, world-class communications infrastructure and a wide range of services. Every citizen must be equipped with the skills needed to live and work in this new informa tion society. Dierent means of access must prevent info-exclusion. The com bat against illiteracy must be reinforced. Special attention must be given to disabled people. Information technologies can be used to renew urban and regional development and promote environmentally sound technologies. Con tent industries create added value by exploiting and networking European cul tural diversity. Real eorts must be made by public administrations at all levels to exploit new technologies to make information as accessible as possible.

  3. Realising Europe's full e-potential depends on creating the conditions for electronic commerce and the Internet to flourish, so that the Union can catch up with its competitors by hooking up many more businesses and homes to the Internet via fast connections. The rules for electronic commerce must be pre dictable and inspire business and consumer condence. Steps must be taken to ensure that Europe maintains its lead in key technology areas such as mobile communications. The speed of technological change may require new and more flexible regulatory approaches in the future.

  4. The European Council calls in particular on:

    - the Council, along with the European Parliament where appropriate, to adopt as rapidly as possible during 2000 pending legislation on the legal framework for electronic commerce, on copyright and related rights, on e-money, on the distance selling of nancial services, on jurisdiction and the enforcement of judgments, and the dual-use export control regime; the Commission and the Council to consider how to promote consumer con dence in electronic commerce, in particular through alternative dispute resolution systems;

    - the Council and the European Parliament to conclude as early as possible in 2001 work on the legislative proposals announced by the CommissionPage 79 following its 1999 review of the telecoms regulatory framework; the Member States and, where appropriate, the Community to ensure that the frequency requirements for future mobile communications systems are met in a timely and ecient manner. Fully integrated and liberalised telecommunications markets should be completed by the end of 2001;

    - the Member States, together with the Commission, to work towards intro ducing greater competition in local access networks before the end of 2000 and unbundling the local loop in order to help bring about a substantial reduction in the costs of using the Internet;

    - the Member States to ensure that all schools in the Union have access to the Internet and multimedia resources by the end of 2001, and that all the teachers needed are skilled in the use of the Internet and multimedia resources by the end of 2002;

    - the Member States to ensure generalised electronic access to main basic public services by 2003;

    - the Community and the Member States, with the support of the EIB, to make available in all European countries low cost, high-speed inter connected networks for Internet access and foster the development of state- of-the-art information technology and other telecom networks as well as the content for those networks. Specic targets should be dened in the eEurope Action Plan.

Establishing a European area of research and innovation
  1. Given the signicant role played by research and development in gener ating economic growth, employment and social cohesion, the Union must work towards the objectives set out in the Commission's communication 'Towards a European research area'. Research activities at national and Union level must be better integrated and coordinated to make them as ecient and innovative as possible, and to ensure that Europe oers attractive prospects to its best brains. The instruments under the Treaty and all other appropriate means, including voluntary arrangements, must be fully exploited to achieve this objective in a flexible, decentralised and non-bureaucratic manner. At the same time, innovation and ideas must be adequately rewarded within the new knowledge-based economy, particularly through patent protection.

  2. The European Council asks the Council and the Commission, together with the Member States where appropriate, to take the necessary steps as part of the establishment of a European research area to:

- develop appropriate mechanisms for networking national and joint research programmes on a voluntary basis around freely chosen objectives, in order to take greater advantage of the concerted resources devoted to R & D in the Member States, and ensure regular reporting to the CouncilPage 80 on the progress achieved; to map by 2001 research and development excellence in all Member States in order to foster the dissemination of excellence;

- improve the environment for private research investment, R & D partner ships and high technology start-ups, by using tax policies, venture capital and EIB support;

- encourage the development of an open method of coordination for bench marking national research and development policies and identify, by June 2000, indicators for assessing performance in dierent elds, in particu lar with regard to the development of human resources; introduce by June 2001 a European innovation scoreboard;

- facilitate the creation by the end of 2001 of a very high-speed trans- european network for electronic scientic communications, with EIB sup port, linking research institutions and universities, as well as scientic libraries, scientic centres and, progressively, schools;

- take steps to remove obstacles to the mobility of researchers in Europe by 2002 and to attract and retain high-quality research talent in Europe;

- ensure that a Community patent is available by the end of 2001, including the utility model, so that Community-wide patent protection in the Union is as simple and inexpensive to obtain and as comprehensive in its scope as the protection granted by key competitors.

Creating a friendly environment for starting up and developing innovative businesses, especially SMEs
  1. The competitiveness and dynamism of businesses are directly dependent on a regulatory climate conducive to investment, innovation, and entrepren- eurship. Further eorts are required to lower the costs of doing business and remove unnecessary red tape, both of which are particularly burdensome for SMEs. The European institutions, national governments and regional and local authorities must continue to pay particular attention to the impact and com pliance costs of proposed regulations, and should pursue their dialogue with business and citizens with this aim in mind. Specic action is also needed to encourage the key interfaces in innovation networks, i.e. interfaces between companies and nancial markets, R & D and training institutions, advisory services and technological markets.

  2. The European Council considers that an open method of coordination should be applied in this area and consequently asks:

- the Council and the Commission to launch, by June 2000, a benchmark ing exercise on issues such as the length of time and the costs involved in setting up a company, the amount of risk capital invested, the numbersPage 81 of business and scientic graduates and training opportunities. The rst results of this exercise should be presented by December 2000;

- the Commission to present shortly a communication on an entrepreneur ial, innovative and open Europe together with the multiannual programme in favour of enterprise and entrepreneurship for 2001-2005 which will play an important role as catalyst for this exercise;

- the Council and the Commission to draw up a European Charter for small companies to be endorsed in June 2000 which should commit Member States to focus in the abovementioned instruments on small companies as the main engines for job-creation in Europe, and to respond specically to their needs;

- the Council and the Commission to report by the end of 2000 on the ongoing review of EIB and EIF nancial instruments in order to redirect funding towards support for business start-ups, high-tech rms and micro- enterprises, as well as other risk-capital initiatives proposed by the EIB.

Economic reforms for a complete and fully operational internal market
  1. Rapid work is required in order to complete the internal market in cer tain sectors and to improve under-performance in others in order to ensure the interests of business and consumers. An eective framework for ongoing review and improvement, based on the Internal Market Strategy endorsed by the Helsinki European Council, is also essential if the full benets of market liberalisation are to be reaped. Moreover, fair and uniformly applied competi tion and state aid rules are essential for ensuring that businesses can thrive and operate eectively on a level playing eld in the internal market.

  2. The European Council accordingly asks the Commission, the Council and the Member States, each in accordance with their respective powers:

    - to set out by the end of 2000 a strategy for the removal of barriers to ser vices;

    - to speed up liberalisation in areas such as gas, electricity, postal services and transport. Similarly, regarding the use and management of airspace, the Council asks the Commission to put forward its proposals as soon as possible. The aim is to achieve a fully operational internal market in these areas; the European Council will assess progress achieved when it meets next spring on the basis of a Commission report and appropriate propos als;

    - to conclude work in good time on the forthcoming proposals to update public procurement rules, in particular to make them accessible to SMEs, in order to allow the new rules to enter into force by 2002;Page 82

    - to take the necessary steps to ensure that it is possible by 2003 for Community and government procurement to take place online;

    - to set out by 2001 a strategy for further coordinated action to simplify the regulatory environment, including the performance of public administra tion, at both national and Community level. This should include identify ing areas where further action is required by Member States to rationalise the transposition of Community legislation into national law;

    - to further their eorts to promote competition and reduce the general level of state aids, shifting the emphasis from supporting individual companies or sectors towards tackling horizontal objectives of Community interest, such as employment, regional development, environment and training or research.

  3. Comprehensive structural improvements are essential to meet ambitious targets for growth, employment and social inclusion. Key areas have already been identied by the Council to be reinforced in the Cardi process. The European Council accordingly invites the Council to step up work on struc tural performance indicators and to report by the end of 2000.

  4. The European Council considers it essential that, in the framework of the internal market and of a knowledge-based economy, full account is taken of the Treaty provisions relating to services of general economic interest, and to the undertakings entrusted with operating such services. It asks the Commis sion to update its 1996 communication based on the Treaty.

Efficient and integrated financial markets
  1. Ecient and transparent nancial markets foster growth and employment by better allocation of capital and reducing its cost. They therefore play an essential role in fuelling new ideas, supporting entrepreneurial culture and promoting access to and use of new technologies. It is essential to exploit the potential of the euro to push forward the integration of EU nancial markets.

    Furthermore, ecient risk capital markets play a major role in innovative high-growth SMEs and the creation of new and sustainable jobs.

  2. To accelerate completion of the internal market for nancial services, steps should be taken:

    - to set a tight timetable so that the Financial Services Action Plan is imple mented by 2005, taking into account priority action areas such as: facilitat ing the widest possible access to investment capital on an EU-wide basis, including for SMEs, by means of a 'single passport' for issuers; facilitating the successful participation of all investors in an integrated market elimin ating barriers to investment in pension funds; promoting further integra-Page 83 tion and better functioning of government bond markets through greater consultation and transparency on debt issuing calendars, techniques and instruments, and improved functioning of cross-border sale and repurchase ('repo') markets; enhancing the comparability of companies' nancial statements; and more intensive cooperation by EU nancial market regulators;

    - to ensure full implementation of the Risk Capital Action Plan by 2003;

    - to make rapid progress on the long-standing proposals on takeover bids and on the restructuring and winding-up of credit institutions and insur ance companies in order to improve the functioning and stability of the European nancial market;

    - to conclude, in line with the Helsinki European Council conclusions, the pending tax package.

Coordinating macroeconomicpolicies: fiscal consolidation, quality and sustainability of public finances
  1. As well as preserving macroeconomic stability and stimulating growth and employment, macroeconomic policies should foster the transition towards a knowledge-based economy, which implies an enhanced role for structural policies. The macroeconomic dialogue under the Cologne process must create a relationship of trust between all the actors involved in order to have a proper understanding of each other's positions and constraints. The opportunity pro vided by growth must be used to pursue scal consolidation more actively and to improve the quality and sustainability of public nances.

  2. The European Council requests the Council and the Commission, using the existing procedures, to present a report by spring 2001 assessing the con tribution of public nances to growth and employment, and assessing, on the basis of comparable data and indicators, whether adequate concrete measures are being taken in order to:

- alleviate the tax pressure on labour and especially on the relatively unskilled and low-paid, improve the employment and training incentive eects of tax and benet systems;

- redirect public expenditure towards increasing the relative importance of capital accumulation - both physical and human - and support research and development, innovation and information technologies;

- ensure the long-term sustainability of public nances, examining the dif ferent dimensions involved, including the impact of ageing populations, in the light of the report to be prepared by the High Level Working Party on Social Protection.Page 84

Modernising The European Social Model by Investing in People and Building an Active Welfare State
  1. People are Europe's main asset and should be the focal point of the Union's policies. Investing in people and developing an active and dynamic welfare state will be crucial both to Europe's place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty.

Education and training for living and working in the knowledge society
  1. Europe's education and training systems need to adapt both to the demands of the knowledge society and to the need for an improved level and quality of employment. They will have to oer learning and training opportunities tail ored to target groups at dierent stages of their lives: young people, unem ployed adults and those in employment who are at risk of seeing their skills overtaken by rapid change. This new approach should have three main com ponents: the development of local learning centres, the promotion of new basic skills, in particular in the information technologies, and increased transpar ency of qualications.

  2. The European Council accordingly calls upon the Member States, in line with their constitutional rules, the Council and the Commission to take the necessary steps within their areas of competence to meet the following tar gets:

    - a substantial annual increase in per capita investment in human resources;

    - the number of 18 to 24 year olds with only lower-secondary level education who are not in further education and training should be halved by 2010;

    - schools and training centres, all linked to the Internet, should be developed into multi-purpose local learning centres accessible to all, using the most appropriate methods to address a wide range of target groups; learning partnerships should be established between schools, training centres, rms and research facilities for their mutual benet;

    - a European framework should dene the new basic skills to be provided through lifelong learning: IT skills, foreign languages, technological cul ture, entrepreneurship and social skills; a European diploma for basic IT skills, with decentralised certication procedures, should be established in order to promote digital literacy throughout the Union;

    - dene, by the end of 2000, the means for fostering the mobility of stu dents, teachers and training and research sta both through making the best use of existing Community programmes (Socrates, Leonardo, Youth), by removing obstacles and through greater transparency in the recognition of qualications and periods of study and training; to take steps to removePage 85 obstacles to teachers' mobility by 2002 and to attract high-quality teachers.

    - a common European format should be developed for curricula vitae, to be used on a voluntary basis, in order to facilitate mobility by helping the assessment of knowledge acquired, both by education and training estab lishments and by employers.

  3. The European Council asks the Council (Education) to undertake a general reflection on the concrete future objectives of education systems, focusing on common concerns and priorities while respecting national diversity, with a view to contributing to the Luxembourg and Cardi processes and presenting a broader report to the European Council in the spring of 2001.

More and better jobs for Europe: developing an active employment policy
  1. The Luxembourg process, based on drawing up employment guidelines at Community level and translating them into National Employment Action Plans, has enabled Europe to substantially reduce unemployment. The mid term review should give a new impetus to this process by enriching the guide lines and giving them more concrete targets by establishing closer links with other relevant policy areas and by dening more eective procedures for involv ing the dierent actors. The social partners need to be more closely involved in drawing up, implementing and following up the appropriate guidelines.

  2. In this context, the Council and the Commission are invited to address the following four key areas:

    - improving employability and reducing skills gaps, in particular by provid ing employment services with a Europe-wide data base on jobs and learn ing opportunities; promoting special programmes to enable unemployed people to ll skill gaps;

    - giving higher priority to lifelong learning as a basic component of the European social model, including by encouraging agreements between the social partners on innovation and lifelong learning; by exploiting the complementarity between lifelong learning and adaptability through flex ible management of working time and job rotation; and by introducing a European award for particularly progressive rms. Progress towards these goals should be benchmarked;

    - increasing employment in services, including personal services, where there are major shortages; private, public or third sector initiatives maybe involved, with appropriate solutions for the least-favoured categories;

    - furthering all aspects of equal opportunities, including reducing occupa tional segregation, and making it easier to reconcile working life and familyPage 86 life, in particular by setting a new benchmark for improved childcare provision.

  3. The European Council considers that the overall aim of these measures should be, on the basis of the available statistics, to raise the employment rate from an average of 61 % today to as close as possible to 70 % by 2010 and to increase the number of women in employment from an average of 51 % today to more than 60 % by 2010. Recognising their dierent starting points, Mem ber States should consider setting national targets for an increased employ ment rate. This, by enlarging the labour force, will reinforce the sustainability of social protection systems.

Modernising social protection
  1. The European social model, with its developed systems of social protection, must underpin the transformation to the knowledge economy. However, these systems need to be adapted as part of an active welfare state to ensure that work pays, to secure their long-term sustainability in the face of an ageing popula tion, to promote social inclusion and gender equality, and to provide quality health services. Conscious that the challenge can be better addressed as part of a cooperative eort, the European Council invites the Council to:

- strengthen cooperation between Member States by exchanging experiences and best practice on the basis of improved information networks which are the basic tools in this eld;

- mandate the High Level Working Party on Social Protection, taking into consideration the work being done by the Economic Policy Committee, to support this cooperation and, as its rst priority, to prepare, on the basis of a Commission communication, a study on the future evolution of social protection from a long-term point of view, giving particular attention to the sustainability of pensions systems in dierent time frameworks up to 2020 and beyond, where necessary. A progress report should be available by December 2000.

Promoting social inclusion
  1. The number of people living below the poverty line and in social exclusion in the Union is unacceptable. Steps must be taken to make a decisive impact on the eradication of poverty by setting adequate targets to be agreed by the Council by the end of the year. The High Level Working Party on Social Pro tection will be involved in this work. The new knowledge-based society oers tremendous potential for reducing social exclusion, both by creating the eco nomic conditions for greater prosperity through higher levels of growth and employment, and by opening up new ways of participating in society. At the same time, it brings a risk of an ever-widening gap between those who have access to the new knowledge, and those who are excluded. To avoid this riskPage 87 and maximise this new potential, eorts must be made to improve skills, promote wider access to knowledge and opportunity and ght unemployment: the best safeguard against social exclusion is a job. Policies for combating social exclusion should be based on an open method of coordination combining national action plans and a Commission initiative for cooperation in this eld to be presented by June 2000.

  2. In particular, the European Council invites the Council and the Commission to:

    - promote a better understanding of social exclusion through continued dia logue and exchanges of information and best practice, on the basis of com monly agreed indicators; the High Level Working Party on Social Protec tion will be involved in establishing these indicators;

    - mainstream the promotion of inclusion in Member States' employment, education and training, health and housing policies, this being comple mented at Community level by action under the Structural Funds within the present budgetary framework;

    - develop priority actions addressed to specic target groups (for example minority groups, children, the elderly and the disabled), with Member States choosing amongst those actions according to their particular situ ations and reporting subsequently on their implementation.

  3. Taking account of the present conclusions, the Council will pursue its reflection on the future direction of social policy on the basis of a Commis sion communication, with a view to reaching agreement on a European Social Agenda at the Nice European Council in December, including the initiatives of the dierent partners involved.

Putting Decisions Into Practice: A More Coherent and Systematic Approach Improving the existing processes
  1. No new process is needed. The existing Broad Economic Policy Guidelines and the Luxembourg, Cardi and Cologne processes oer the necessary instruments, provided they are simplied and better coordinated, in particular through other Council formations contributing to the preparation by the Econ Council of the Broad Economic Policy Guidelines. Moreover, the Broad Economic Policy Guidelines should focus increasingly on the medium- and long-term implications of structural policies and on reforms aimed at promoting economic growth potential, employment and social cohesion, as well as on the transition towards a knowledge-based economy. The Cardi and Lux-Page 88 embourg processes will make it possible to deal with their respective subject matters in greater detail.

  2. These improvements will be underpinned by the European Council tak ing on a pre-eminent guiding and coordinating role to ensure overall coher ence and the eective monitoring of progress towards the new strategic goal.

The European Council will accordingly hold a meeting every spring devoted to economic and social questions. Work should consequently be organised both upstream and downstream from that meeting. The European Council invites the Commission to draw up an annual synthesis report on progress on the basis of structural indicators to be agreed relating to employment, innovation, economic reform and social cohesion.

Implementing a new open method of coordination
  1. Implementation of the strategic goal will be facilitated by applying a new open method of coordination as the means of spreading best practice and achieving greater convergence towards the main EU goals. This method, which is designed to help Member States to progressively develop their own policies, involves:

    - xing guidelines for the Union combined with specic timetables for achieving the goals which they set in the short, medium and long terms;

    - establishing, where appropriate, quantitative and qualitative indicators and benchmarks against the best in the world and tailored to the needs of dif ferent Member States and sectors as a means of comparing best practice;

    - translating these European guidelines into national and regional policies by setting specic targets and adopting measures, taking into account national and regional dierences;

    - periodic monitoring, evaluation and peer review organised as mutual learning processes.

  2. A fully decentralised approach will be applied in line with the principle of subsidiarity in which the Union, the Member States, the regional and local levels, as well as the social partners and civil society, will be actively involved, using variable forms of partnership. A method of benchmarking best practices on managing change will be devised by the European Commission networking with dierent providers and users, namely the social partners, companies and NGOs.

  3. The European Council makes a special appeal to companies' corporate sense of social responsibility regarding best practices on lifelong learning, work organisation, equal opportunities, social inclusion and sustainable develop ment.Page 89

  4. A High Level Forum, bringing together the Union institutions and bodies and the social partners, will be held in June to take stock of the Luxembourg, Cardi and Cologne processes and of the contributions of the various actors to enhancing the content of the European Employment Pact. Mobilising the necessary means

  5. Achieving the new strategic goal will rely primarily on the private sector, as well as on public-private partnerships. It will depend on mobilising the resources available on the markets, as well as on eorts by Member States.

    The Union's role is to act as a catalyst in this process, by establishing an eect ive framework for mobilising all available resources for the transition to the knowledge-based economy and by adding its own contribution to this eort under existing Community policies while respecting Agenda 2000. Further more, the European Council welcomes the contribution that the EIB stands ready to make in the areas of human capital formation, SMEs and entrepren- eurship, R & D, networks in the information technology and telecom sectors, and innovation. With the 'Innovation 2000 Initiative', the EIB should go ahead with its plans to make another billion euro available for venture capital opera tions for SMEs and its dedicated lending programme of 12 to 15 billion euro over the next three years for the priority areas.Page 90

European Council Brussels 22 and 23 March 2005 Presidency conclusions (extract)
II Relaunching the Lisbon Strategy: A Partnership for Growth and Employment
A A Strategy for Today's World
  1. Five years after the launch of the Lisbon Strategy, the results are mixed. Alongside undeniable progress, there are shortcomings and obvious delays. Given the challenges to be met, there is a high price to pay for delayed or incomplete reforms, as is borne out by the gulf between Europe's growth potential and that of its economic partners. Urgent action is therefore called for.

  2. To that end, it is essential to relaunch the Lisbon Strategy without delay and refocus priorities on growth and employment. Europe must renew the basis of its competitiveness, increase its growth potential and its productivity and strengthen social cohesion, placing the main emphasis on knowledge, innovation and the optimisation of human capital.

  3. To achieve these objectives, the Union must mobilise to a greater degree all appropriate national and Community resources - including the cohesion pol icy - in the Strategy's three dimensions (economic, social and environmental) so as better to tap into their synergies in a general context of sustainable devel opment. Alongside the governments, all the other players concerned - parlia ments, regional and local bodies, social partners and civil society - should be stakeholders in the Strategy and take an active part in attaining its objectives.

  4. At the same time, the nancial perspective for 2007-2013 will have to pro vide the Union with adequate funds to carry through the Union's policies in general, including the policies that contribute to the achievement of the Lis bon priorities. Sound macroeconomic conditions are essential to underpin the eorts in favour of growth and employment. The amendments to the Stability and Growth Pact will contribute to this and at the same time enable Member States to play a full role in relaunching long-term growth.

  5. The European Council welcomes the Commission communication 'Work ing together for growth and jobs - A new start for the Lisbon Strategy' sub mitted for the mid-term review. It welcomes the important contributions in this context by the European Parliament, the Committee of the Regions, the Economic and Social Committee and the social partners. In the light of these proposals, the European Council asks the Commission, Council and Member States to relaunch the Strategy without delay on the basis of the following ele ments centred on growth and employment.Page 91

  6. The European Council welcomes the commitment expressed by the social partners at the Tripartite Summit on 22 March. It calls on the social partners to submit a common work programme for growth and employment in the context of their respective areas of competence.

In addition, it urges the European Economic and Social Committee to set up with Member States' economic and social committees and other partner organisations an interactive network of civil society initiatives aimed at promoting the implementation of the strategy.

B Vital Strands of the Relaunch Knowledge and innovation - engines of sustainable growth
  1. The European area of knowledge should enable undertakings to build new competitive factors, consumers to benet from new goods and services and workers to acquire new skills. With that in mind, it is important to develop research, education and all forms of innovation in so far as they make it pos sible to turn knowledge into an added value and create more and better jobs.

    Moreover, in the years to come, a genuine dialogue must be encouraged among those directly involved in the knowledge-based society in the public and pri vate sectors.

  2. In the eld of R & D, the overall objective of 3 % investment is maintained, with an adequate split between private and public investment. Specic interme diate levels need to be set out at national level. This objective will be obtained, inter alia, by tax incentives for private investment, a better leverage eect of public investment and by a modernised management of research institutions and universities.

  3. The seventh framework programme for research and development will lend fresh impetus to a European research area for the benet of all Member States by enhancing European cooperation, mobilising private investment in areas crucial to competitiveness and helping to ll the technology gap. The programme should act as a lever on national research budgets. The attrac tion which Europe holds for researchers should be enhanced by an eective improvement in the conditions under which they move and practise their pro fession. The creation of a European Research Council to support cutting-edge research and basic research would be signicant in this context. Work on the European space programme will make it possible to exploit the capacity for innovation and the considerable potential in this sector.

  4. Member States should develop their innovation policies in the light of their specic characteristics and, inter alia, with the following objectives: establish ing support mechanisms for innovative SMEs, including high-tech start-ups, promoting joint research between undertakings and universities, improvingPage 92 access to risk capital, refocusing public procurement on innovative products and services, developing partnerships for innovation and innovation centres at regional and local level.

  5. The new Community competitiveness and innovation programme should, for its part, lend great impetus to innovation throughout the European Union by establishing a new mechanism for nancing innovative SMEs with a high growth potential, by streamlining and strengthening the technical support net work for innovation in undertakings, and by supporting the development of regional centres and European networks for innovation.

  6. The European Council notes the Commission's intention to submit a proposal on the establishment of a European Technology Institute.

  7. Europe needs a solid industrial fabric throughout its territory. The neces sary pursuit of an active industrial policy means strengthening the competitive advantages of the industrial base while ensuring the complementarity of the action at national, trans-national and European level. This objective will be pursued, inter alia, by means of technological initiatives based on public-pri vate partnerships and the organisation of technological platforms aimed at setting long-term research agendas. The Commission will report back on its preparatory work on the subject by June.

  8. The European Investment Bank will have to extend its Structured Finance Facility to R & D projects and, together with the Commission, explore new ways of using Community funds as levers for EIB loans.

  9. It is essential to build a fully inclusive information society, based on wide spread use of information and communication technologies (ICTs) in public services, SMEs and households. To that end, the i2oio initiative will focus on ICT research and innovation, content industry development, the security of networks and information, as well as convergence and interoperability in order to establish a seamless information area.

  10. The European Council reiterates the important contribution of environ ment policy to growth and employment, and also to the quality of life, in par ticular through the development of eco-innovation and eco-technology as well as the sustainable management of natural resources, which lead to the creation of new outlets and new jobs. It emphasises the importance of energy eciency as a factor in competitiveness and sustainable development and welcomes the Commission's intention of producing a European initiative on energy e ciency and a Green Paper in 2005. Eco-innovation and environmental techno logy should be strongly encouraged, particularly in energy and transport, with particular attention paid to SMEs and to promoting eco-technology in public procurement. In addition to its growth in the internal market, this sector has considerable export potential. The European Council invites the Commission and the Member States to implement the action plan for eco-technology as aPage 93 matter of urgency, including by specic actions on a time scale agreed with economic operators. The European Council rearms the importance of the objective of halting the loss of biological diversity between now and 2010, in particular by incorporating this requirement into other policies, given the importance of biodiversity for certain economic sectors.

An attractive area in which to invest and work
  1. In order to encourage investment and provide an attractive setting for busi ness and work, the European Union must complete its internal market and make its regulatory environment more business-friendly, while business must in turn develop its sense of social responsibility. There is also a need for ecient infrastructure aimed, inter alia, at the problem of missing links, high-standard, aordable general-interest services and a healthy environment based on sus tainable consumption and production and a high quality of life.

  2. The European Council calls on Member States to spare no eort in honour ing the commitments given in Barcelona in March 2002 as regards - among other things - the transposition of Directives.

  3. For the completion of the internal market, the European Council has identied the following priority areas.

    In order to promote growth and employment and to strengthen competitiveness, the internal market of services has to be fully operational while preserving the European social model. In the light of this ongoing debate which shows that the directive as it is currently drafted does not fully meet these requirements, the European Council requests all eorts to be undertaken within the legislative process in order to secure a broad consensus that meets all these objectives.

    The European Council notes that eective services of general economic interest have an important role to play in a competitive and dynamic economy.

    Any agreement on REACH must reconcile environmental and health protection concerns with the need to promote the competitiveness of European industry, while paying particular attention to SMEs and their ability to innovate.

  4. In addition to an active competition policy, the European Council calls on Member States to continue working towards a reduction in the general level of state aid, while making allowance for any market failures. This movement must be accompanied by a redeployment of aid in favour of support for certain horizontal objectives such as research and innovation and the optimisation of human capital. The reform of regional aid should also foster a high level of investment and ensure a reduction in disparities in accordance with the Lisbon objectives.Page 94

  5. The European Council reiterates the importance it attaches to improving the regulatory environment and urges that work press ahead - as envisaged by, among other things, the initiative of the six Presidencies and the Operational Programme of the Council for 2005 - in preparation for an overall assessment at one of its forthcoming meetings. It notes the communication submitted by the Commission and stresses the need for rm action along these lines at both European and national level. The European Council requests the Com mission and the Council to consider a common methodology for measuring administrative burdens with the aim of reaching an agreement by the end of 2005. That agreement should take advantage of the results of the Commission's pilot projects which are due in the course of 2005. It calls on the Commission to develop its impact-analysis system in accordance with its communication, to work together with the Council to ensure faster progress in the context of simplication and, lastly, to take initiatives to encourage the participation of all players directly concerned by this process. It stresses that initiatives taken in the context of improving the regulatory environment must not themselves turn into administrative burdens.

  6. Small and medium-sized enterprises play a key role for growth and employ ment and participate in developing the industrial fabric. Member States should therefore continue with their policies to cut red tape, introduce one-stop con tact points and provide access to credit, micro-loans, other forms of nancing and accompanying services. Access by SMEs to Community programmes is also of major importance. The Commission and Member States are also called on to make best use of support networks for SMEs; to this end, they should swiftly identify, with national and regional social partners and, as far as pos sible, with chambers of commerce, the rationalisation and cooperation meas ures required.

  7. The European Council would urge the European Investment Fund to diversify its activities, in particular towards the nancing of innovative SMEs through individual-investor (business-angel) and technology-transfer net works. Flexible funding suited to such activities should be found, together with the Commission. This action should also be supported by the new Community competitiveness and innovation programme.

  8. The single market must in addition be based on a physical internal market free of interoperability and logistical constraints. Deployment of high-speed networks in poorly served regions is a prerequisite for the development of a knowledge-based economy. In general, infrastructure investment will boost growth and bring greater economic, social and environmental convergence. Under the growth initiative and quick-start programmes, the European Coun cil emphasises the importance of carrying out the priority projects in the eld of transport and energy networks and calls on the Union and the Member States to keep up their investment eorts and to encourage public-private part nerships.Page 95

  9. The open global economy oers new opportunities for stimulating growth, competitiveness and redeployment in Europe's economy. The European Coun cil recognises the importance of reaching an ambitious, balanced agreement in the Doha negotiations and the value of developing bilateral and regional free-trade agreements; pursuit of that objective must be accompanied by a sus tained eort to ensure international convergence of standards, including as regards respect for intellectual property rights.

Growth and employment making for social cohesion
  1. The European Council welcomes the Commission communication on the social agenda, which will help to achieve the Lisbon Strategy objectives by rein forcing the European social model based on the quest for full employment and greater social cohesion.

  2. Raising employment rates and extending working life, coupled with reform of social protection systems, provide the best way of maintaining the present level of social protection.

    The Commission will reflect in the context of its ongoing work on the relaunch of Lisbon on issues arising about how to ensure sustainable funding of our social model and will report to the European Council in the autumn.

  3. The objectives of full employment, job quality, labour productivity and social cohesion must be reflected in clear and measurable priorities: making work a real option for everyone, attracting more people into the labour market, improving adaptability, investing in human capital, modernising social protec tion, promoting equal opportunities, inter alia, between men and women, and fostering social inclusion.

  4. It is essential to attract more people into the labour market. This aim will be achieved by following the course of an active employment policy, of making work pay and of measures to reconcile working life and family life, including the improvement of childcare facilities; priority must also be given to equal opportunities, active ageing strategies, encouraging social integration and con verting undeclared work into lawful employment. New sources of jobs must also be developed in services to individuals and businesses, in the social eco nomy, in town and country planning and environmental protection and in new industrial occupations, partly through promotion of local growth and employment partnerships.

  5. New forms of work organisation and greater diversity of contractual arrangements for workers and businesses, better combining flexibility with security, will contribute to adaptability. Emphasis should also be placed on bet ter anticipation and management of economic change.

  6. Human capital is Europe's most important asset. Member States should step up their eorts to raise the general standard of education and reduce thePage 96 number of early school-leavers, in particular by continuing with the education and training 2010 work programme. Lifelong learning is a sine qua non if the Lisbon objectives are to be achieved, taking into account the desirability of high quality at all levels. The European Council calls on Member States to make lifelong learning an opportunity open to all in schools, businesses and households. Particular attention should be paid to the availability of lifelong learning facilities for low-skilled workers and for the sta of small and medium-sized enterprises. The European Council therefore calls for the early adoption of the programme which the Commission will shortly be submitting in this connection. Availability should also be facilitated by means of working time organisation, family support services, vocational guidance and new forms of cost-sharing.

  7. The European education area should be developed by encouraging geo graphical and occupational mobility. The European Council would point to the importance of disseminating the Europass and of adopting the Directive on recognition of professional qualications in 2005 and a European qualica tions framework in 2006.

  8. Social inclusion policy should be pursued by the Union and by Member States, with its multifaceted approach, focusing on target groups such as chil dren in poverty.

  9. A return to sustained and sustainable growth requires greater demographic dynamism, improved social and vocational integration and fuller utilisation of the human potential embodied by European youth. To this end, the European Council has adopted the European Youth Pact set out in Annex I as one of the instruments contributing to the achievement of the Lisbon objectives.

C Improving Governance
  1. It is important that EU and Member States' action should make a bigger and more practical contribution to growth and employment. Accordingly, a simplied arrangement will be introduced. Its aim is threefold: to facilitate the identication of priorities while maintaining the overall balance of the strat egy and the synergy between its various components; to improve the imple mentation of those priorities on the ground by increasing the Member States' involvement; and to streamline the monitoring procedure so as to give a clearer picture of national implementation of the strategy.

  2. This new approach, based on a three-year cycle which starts this year and will have to be renewed in 2008, will comprise the following steps:

    (a) The starting-point of the cycle will be the Commission's synoptic document ('strategic report'). This report will be examined in the relevant Council congurations and discussed at the spring European Council meeting,Page 97 which will establish political guidelines for the economic, social and environmental strands of the strategy.

    (b) In accordance with the procedures laid down in Articles gg and 128 of the Treaty and on the basis of the European Council conclusions, the Council will adopt a set of'integrated guidelines' consisting of two elements: broad economic policy guidelines (BEPGs) and employment guidelines (EGs).

    As a general instrument for coordinating economic policies, the BEPGs should continue to embrace the whole range of macroeconomic and micro- economic policies, as well as employment policy insofar as this interacts with those policies; the BEPGs will ensure general economic consistency between the three strands of the strategy.

    (c) On the basis of the 'integrated guidelines':

    - Member States will draw up, on their own responsibility, 'national reform programmes' geared to their own needs and specic situation. Consultations on these programmes will be held with all stakeholders at regional and national level, including parliamentary bodies in accord ance with each Member State's specic procedures. The programmes will make allowance for national policy cycles and may be revised in the event of changes in the situation. Member States will enhance their internal coordination, where appropriate by appointing a Lisbon national coordinator;

    - on its side, the Commission will present, as a counterpart to the national programmes, a 'Community Lisbon programme' covering all action to be undertaken at Community level in the interests of growth and employment, taking account of the need for policy convergence.

    (d) The reports on follow-up to the Lisbon Strategy sent to the Commission by Member States each year - including the application of the open method of coordination - will now be grouped in a single document clearly dis tinguishing between the dierent areas of action and setting out all meas ures taken during the previous twelve months to implement the national programmes; the rst such document will be submitted in the autumn of 2006.

    (e) The Commission will report on the implementation of the three strands of the strategy each year. On the basis of the Commission's assessment, the European Council will review progress every spring and decide on any necessary adjustments to the integrated guidelines.Page 98

    (f) For the BEPGs, the existing multilateral surveillance arrangements will apply.

  3. At the end of the third year of each cycle, the integrated guidelines, the national reform programmes and the Community Lisbon programme will be renewed in accordance with the procedure described above, taking as the start ing-point a strategic report by the Commission, based on an overall assessment of progress during the previous three years.

  4. In 2005 the cycle will begin in April, with the Commission submitting inte grated guidelines drawn up on the basis of these conclusions. Member States are asked to draw up their national reform programmes in autumn 2005.


    [2] OJ C 236, 2.8.1997, pp. 3 and .

    [3] OJ C 35, 2.2.1998, pp. 1-4.

    [4] Declaration No 3 to the Treaty on European Union arms that for the purpose of applying the provisions set out in Title VI on economic and monetary policy of the Treaty establishing the European Community, the usual practice, according to which the Council meets in the composition of Economic and Finance Ministers, shall be continued, without prejudice in Article ioc>j(2) to () and Article io9k(2) of the Treaty.